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Confidence / Powell

Confidence

The final October UoM confidence index was 100.7 as expected, down slightly from the preliminary one of 101.1 but up from 100.7 in September and the best since 2004. Both components were higher m/o/m and one year inflation expectations came in at 2.4% vs 2.3% initially but down from 2.7% in September. This was lowered in part to the 2nd weakest reading in those expecting higher gasoline prices. This of course is a price that many see every day. Business expectations were little changed with September but those expecting higher employment was up by 3 pts m/o/m. The UoM also said this, “Personal finances were judged near all-time record favorable levels due to gains in household incomes as well as decade highs in home and stock values.” In fact, the spread between the value of stock and home values relative to disposable income is at a record high and above the March 2000 and July 2007 previous peaks.

Spending intentions moderated from the first October read but are still up nicely from September. Versus last month, those that said it’s a good time to buy a vehicle rose by 6 pts. Those that said it’s a good time to buy a major household item was up by 3 pts and those that said it’s a good time to buy a home was up by 5 pts. Those that said it’s a good time to sell rose 1 pt to just below the highest level in 12 years.

Here is an updated chart on the number of people surveyed that think the stock market will be up in the next 12 months. This question dates back to 2002. The two previous peaks were June 2015 and July 2007.

Bottom line, consumer confidence is very good but as stated here many times this is just a coincident indicator and something I don’t rely on in trying to gauge how consumers will spend in coming months and quarters.